Oil futures at ICE and NYMEX started steady on Wednesday, benefiting from the slightly bullish technical view and fundamentals. Positive economic data out of the EU reinforced traders' optimism even more. This and the surging euro supported oil prices, which soon targeted more resistances. Brent even breached its medium-term resistances at 114.50 USD as well as the psychological one at 115.00 USD. In face of mixed economic data out of the USA released in the afternoon, investors became more cautious. Only with the release of the DoE data on U.S. oil inventoriess released at 4.30 p.m. did the market receive new momentum although a distinct bearish or bullish interpretation of the data was not possible. Merely NYMEX RBOB gasoline surged in view of decreased gasoline inventories. Another bullish signal derived from the FOMC minutes in the evening as the majority of central bankers advocates to continue quantitative easing for the U.S. economy. Oil futures did not hit new highs in the evening but closed with considerable gains. The stochastic oscillator is still slightly bullish for WTI and G.Oil but has not given of any fresh signals since the buying signals date a few days back. Oil futures are still highly overbought but the uptrend remains intact. Brent managed to breach two important resistance yesterday, getting more upward potential, see also technical analysis. Given the lack of fresh signals from the technical analysis, it can still be seen as bullish as a change in trend is not in sight yet depsite the overbought market situation.
ICE gasoil for February delivery is expected to open 2.50 to +4.00 dollars up at about 994,00 dollars/ton after settling at 990,75 dollars Wednesday night. This was 4.50 dollars above Tuesday's settlement. With some 56.500 deals the traded volume was about on average. NYMEX heating oil and gasoline contracts for February delivery expire tonight at 8.30 p.m. The more actively traded month today is the new front month March. The traded volume of the February contracts is therefore rather thin which makes the futures volatile and susceptible to price fluctuations.
German economic indicators:
• German unemployment rate December 6,8%. Forecast: 6,9%; previous month: 6,9%
• German retail sales December -4,7%. Forecast: -1,6%; previous month: -0,6%
Fed to continue expansive measures: The FOMC’s tow-day meeting ended yesterday evening. As expected, central bankers decided to maintain its extremly low inerest level (0.0% to 0.25%). They also announced to continue its monthly bond purchases of unlimited duration worth 85 billion USD. In a final statement, the FOMC is confident that the U.S. economy would moderately grow in 2013 although first estimates on the GDP in Q4 2012 forcast a surprising decline by 0.1%. Experts track this back to one-time items such as the fiscal cliff which had made companies utterly cautious in terms of investments. While the housing market continues to recover, the job market is lagging behind. Thus, the Fed wants to continue expansive measures to stimulate the economy until postive figures can be seen. The unemployment rate amounted to 7.8% in December, which is clearly higher than the target set last year by head of the Fed, Ben Bernanke. However, the inflation rate is steady at 2%, offering enough scope to proceed with quantitative easing.
U.S.
Nymex slightly bullish: Oil futures held steady in the evening when the FOMC reported to continue quantitative easing. Trading interest at NYMEX is below average for this time of day. Traders are waiting for the European market to open, for signals from forex trading and for economic data to be released in the course of the day.
API's: Crude oil +4.2; distillates -1.8; gasoline +2.4 million barrels vs previous week. Refinery utilization +0.7%
DOE's: Crude oil +5.9; distillates -2.3; gasoline +1.0 million barrels vs previous week. Refinery utilization +1.4%, Cushing +0.3
Forecasts: Crude oil + 2.5; distillates -1.1; gasoline +1.0 million barrels vs previous week
Although refinery runs increased quite strongly, the build in crude was higher compared to the previous week. This is largely due to the fact that imports had increased again, especially those to the East Coast and the Mid-West (oil from Canada). While this is deemed rather bearish, limiting upward potential particularly of WTI futures, the draw in products at increased refinery runs were all the more surprising and clearly constitute a bullish component. Especially gasoline futures at NYMEX surged after the DoE report was released although inventories at the U.S. East Coast had increased. However, oil inventoires at the populous Atlantic Coast are still about 15% higher than the 5-year average. Moreover, the build in gasoline in this region largely tracks back to the rising imports, a general redistribution in the USA and lower refinery runs at the East Coast.
Houston (ex-wharf indications 29-01)
380cst $638
180cst $695
MGO $1025
New Orleans (ex-wharf indications 28-01)
380cst $648
180cst $689
MGO $1034
Singapore (correct as of 1430hrs LT - delivered indications)
WTI is not doing much currently trading in a triangular pattern +$0.18. Paper for Feb is slightly bullish with 180cst +$4.25 and for 380cst +$4.70, Mar contracts are with 180cst +$4.45, 380st +$4.45. The cargo market is following paper with 180cst +$3.48, 380cst +$4.71 and MGO +$1.79.
The Singapore fuel oil market rose another $3.0 to $5.0 during the morning window. The 380cst cargo premiums rose on stronger buying interest from discount to premium of $0.31. The delivered bunker premiums were seen app. $4.5 above cargo prices yesterday. Bunker fuel oil swaps posted $2.0-2.5/mt along the curve both for Rotterdam and Singapore papers.
High premiums for prompt deliveries.
380 cst $644
180 cst $648
MDO $965
ARA (Amsterdam - Rotterdam - Antwerp)
Northwest European market values followed crude and bullishness was also supported by general tightness of avails. Rotterdam suppliers are facing loading delays and resulting barge congestion. Having said that the smell at Vopak has been apparently solved and operational delays are improving this week although there are still a few barges waiting for loading. The EET terminal is experiencing delays with its jetty previously occupied by cargo for export.
Indications for delivered bunkers:
380cst : $ 632
(1.0 %) :$ 661
180cst: $ 662
(1.0 %):$ 691
MGO 0.1%S: $ 975
